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20 views

Commrev Cases

Uploaded by

Gabby Pundavela
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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AF Realty & Development, Inc. vs. Dieselman Freight Services, Co.

373 SCRA 385 (G.R. No. 1114448)


January 16, 2002

Petitioner: AF Realty & Development, Inc.

Respondents: Dieselman Freight Services, Co., Manuel C. Cruz, Jr. and Midas Development Corporation

J. Sandoval Gutierrez

FACTS:

Dieselman Freight Service Co. is an owner of commercial lot consisting of 2,094 sqm., located at Pasig
City. On May 10, 1988, Manuel C. Cruz, Jr. a member of the board of directors of Dieselman, issued a
letter authorizing Cristeta N. Polintan "to look for a buyer and negotiate the sale" of the lot at ₱3,000.00
per sqm.. Cruz Jr. has no written authority from Dieselman to sell the lot. In turn Polintan authorized
Felicisima Noble to sell the same lot. Noble offered the property to AF Realty & Development, Inc. at
₱2,500.00 per sqm. Zenaida Ranullo, board member and vice-president of AF Realty, accepted the offer
and issued a check in the amount of ₱300,000.00. Ranullo asked Polintan for the board resolution of
Dieselman authorizing the sale. However, Polintan could only give Ranullo the original copy of TCT No.
39849, the tax declaration and tax receipt for the lot, and a photocopy of the Articles of Incorporation of
Dieselman. Cruz, Sr. president of Dieselman, acknowledged receipt of the said ₱300,000.00 as "earnest
money" but required AF Realty to finalize the sale at ₱4,000.00 per sqm. AF Realty replied that it is
willing to pay the balance. However, Cruz, Sr. terminated the offer and demanded from AF Realty the
return of the title of the lot claiming that there was a perfected contract of sale, AF Realty filed a
complaint for specific performance against Dieselman and Cruz, Jr.. The complain prays that Dieselman
be ordered to execute and deliver a final deed of sale in favor of AF Realty. In its answer Dieselman
alleged that it did not authorize any person to enter into such transaction on its behalf. Meanwhile, on
July 30, 1988, Dieselman and Midas Development Corporation (Midas) executed a Deed of Absolute Sale
of the same property.

The CA held that Cruz, Jr. was not authorized in writing by Dieselman to sell the property to AF Realty,
the sale was not perfected, and that the Deed of Absolute Sale between Dieselman and Midas is valid,
there being no bad faith on the part of the latter.

ISSUE:

Whether or not there was a valid delegation of power.

HELD:

Yes.

Sec. 23 of the Corporation Code expressly provides that the corporate powers of all corporations shall
be exercised by the board of directors just as natural person may authorize another to do certain acts in
his behalf, so may board of directors of a corporation may delegate some of its functions to individual
officers or agents appointed by it. Thus contracts or acts of a corporation must be made either by the
Board of Directors or by a corporate agent duly authorized by the board absent such valid
delegation/authorization, the rule is that the declaration of an individual director director relating to the
affairs of the corporation, but not in the course of , or connected with the performance of authorized
duties of such director, are held not binding on the corporation

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